Serious Lag in Processing Industry

In January of this year, production in the processing industry declined at an annual rate of 11.3%. Experts note that it may be a symptom of stagnation and even economic crisis caused by the appreciation of the national currency and a reduction in revenues from the oil economy.

According to the State Statistics Committee, in January, the volume of production in processing industry amounted to 537.5 million manat. The shares of food industry and oil refining accounted each for about 36-37% of the processing industry, where there was a decrease of production, respectively by 9.6% and 17.1%.

Last month there was a decrease in production in many areas of processing. For example, in the garment industry the production amounted to more than 1 million AZN, in comparable prices 80% less than in January 2014. There was 46.7% reduction in the production of printed products (3.2 million manat). Manufacture of machinery and equipment (20.8 million manat) decreased by 12%.

We note that the government states on the implementation of the policy of diversification of the economy in order to reduce its dependence on the oil factor. In January of this year, the share of non-oil GDP was 70.5% versus 54.5% in 2014. However, a major role in this was played not only by the growth of non-oil economy, but also by the reduction of oil and gas production. ----08B